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HomeMy WebLinkAboutProposed FY 2026-27 Resource Management Plan (Budget)City of Virginia Beach Proposed FY 2026-27 Resource Management Plan Kevin Chatellier, Director of Budget and Management Services March 24, 2026 1 FY 2026-27 Operating Budget Highlights 2 •Maintains current services •Addresses baseline cost increases •Avoids disruption of service delivery •Redirection/realignment of resources to meet emerging needs •Some accounting changes •Programmatic resource realignment •Invests in the workforce and infrastructure Expenditures •Added with bill payers – 25.68 (EMS, Stormwater, Parking, Waste Management, Public Utilities) •Added through vacancy redirections –(3 Special Events Team, 6 Special Conservators of the Peace, Landscape Services, Watch Desk Specialists, Park Rangers) Positions •Includes proposed tax relief in line with City Council’s direction Revenue Total Estimated Appropriations 3 Public Safety 14.1%Convention & Visitors, Economic Development 2.1% City General Fund and Flood Protection Debt Service 3.0% Education 43.4% Financial/General Government 7.5% Human Services/Health/Housing 7.5% Parks & Recreation, Libraries, Aquarium, & Cultural Affairs 4.6% Planning/Public Works/Public Utilities 13.7% City Capital Projects 4.1% Total Net Budget: $2,883,974,039 Total City FTEs: 7,780.72 Total School FTEs: 10,579.46 City Council Retreat Guidance •Tax Relief •Invest in Workforce •Invest in Capital Projects/Maintenance Backlog •Recreation Center Modernization & Aquarium •Reduce General Fund Support to Departments (PISC) •Streamline Budget Presentations •Health Insurance Premium Parity •Maintain Capacity for Future Capital Projects within dedications •Continuing engagement on hotel flat tax 4 Late Process Assumption Changes Virginia Retirement System (VRS) reduced Real Estate assessments change Combined change = $33.4 million creating opportunity for both reductions and investments •Tax Relief •Workforce •Infrastructure 5 Baseline Budget Drivers 6 •Disabled Veterans - Increase $10.2 million total exemption $46 million •Elderly and Disabled -Increase $1.3 million total exemption $16.8 million Tax Exemption Programs •Increase of $1.2 million Line of Duty Pay •General Fund increase of $6 million Debt Service •$4.1 million increase Fuel and Energy •Employer contribution increase of 15% or $9 million Health Insurance •Microsoft, Body-Worn Camera, Drone as First Responder, Voter Registrar software, etc. Software and Subscriptions Proposed Tax Relief for Consideration 7 Real Estate Tax Personal Property Tax Homeowners/Cost Burdened1 113,535/27,477 Renters/Cost Burdened1 66,408/35,399 2-cent rate reduction $77 savings on median home value Revenue loss = $9.1m (City) $7.9m (Schools) Estimated Number of Vehicles 495,212 Average Vehicle Value $11,913 Average Vehicles per residence1 2 10.1% local credit $96 estimated savings per residence Revenue loss = $6.8m (City) $6m (Schools) 1 American Community Survey Investment in the Workforce – Compensation 8 •Proposed budget includes funding to provide the workforce with a 3.5% increase •General Fund total is $17.3 million •Employees on step-plan would receive 3% step and 0.5% general increase •Employees not on a step-plan would receive a 3.5% general increase •January implementation of market salary adjustments for non-public safety positions that did not receive adjustments in current year •Public Safety was priority in current year with average adjustments of 11-14%; however, resources did not allow for other adjustments •Budgeted reserve for allocation to implement is $7.5 million Investment in Infrastructure – Maintenance Backlogs 9 •Existing CIP projects specific to facility maintenance: •Fire Stations, Aquarium, Recreation Centers, and Historic Homes •Roughly 300 remaining facilities are maintained through two projects which receive $6.3 million combined annually. •Various Building HVAC Rehab and Renewal •Various Building Rehab and Renewal •Proposed additional investment in Municipal Center facilities, Library facilities, Human Services, and Public Works’ yard facilities total $9.5 million in year 1. FY 2026-27 Schools Operating Highlights Expenditures •Allocates funding toward baseline cost increase such as grant matches, software licenses, increased maintenance, supplies, etc. •Employer health premium contributions increased 15% Compensation and Fringes •5.2% average pay increase for teachers •4.2% average for non-instructional staff •Tentatively open to employee premium increases to ensure health fund sustainability Positions •(52.75) net reductions •40.18 Reduction in Grant Funded positions •5.0 Increase in Transportation related positions •3.55 Reduction in Instruction •3.5 Reduction in Administration Revenue •Baseline revenue growth reported $33.9 million •TBD -Additional State revenue by House or Senate Bill ($8-23 million) 10 Health Insurance Premiums •Employee contributions have not been raised since 2019 as the Health Fund had sufficient fund balance to meet growing cost and needs of health plan. •Healthcare cost are projected to grow by 8% next year with future years potentially growing by 10% annually. •Based on projections, there is a need to increase both employer and employee contributions in January 2027 to ensure the health fund remains sustainable: •Proposed employer contribution increase of 15% •Proposed employee contribution increase of 10% 11 Hypothetical Premium Impact Example •An employee receives a 3.5% general increase in FY 2027 and does not change health plan selection •Employee health contribution increases 10% * Health contribution occurs over 24 pay periods FY 26 FY 27 Increase Per Pay Period Salary 60,000.00 62,100.00 2,100.00 80.77 Health (1,265.88)(1,392.47)(126.59)(5.27)* Net $58,734.12 $60,707.53 $1,973.41 Public Safety Resident Satisfaction Results Virginia Beach Atlantic Region National Average The City's overall efforts to prevent crime 65.9%55.3%48.6% Feeling of Safety - City Parks 73.5%60.9%54.6% Quality of Police Services 79.5%60.3%53.0% Quality of Fire Services 90.9%85.3%76.2% Quality of EMS Services 83.8%77.7%70.5% Quality of service provided by 9-1-1 operators 76.4%-- 13 •Police - Conservators of the Peace (6 FTEs reclass) •Park and Recreation - Park Ranger Program (3 FTEs redirected) •Fire - SCBA ($10 million), Additional funding for Fire Apparatus ($9 million year-1) •Emergency Medical Services - 12 FTEs (EMS Billing Fund) •ECCS - Watch Desk (4 FTE reclass), AI Quality Assurance Tool (vacancy savings) •Public Works - Special Events Team (3 FTEs Redirected and 3 reclass) Parks & Recreation, Library, and Human Services Resident Satisfaction Results Virginia Beach Atlantic Region National Average Overall quality of Parks & Recreation programs and facilities 88.1%48.9%49.2% Mowing & tree trimming along City streets and public areas 71.6%60.9%55.4% Overall quality of the City’s Library services 88.0%70.2%63.9% Library as a resource for access to digital resources and materials 83.0%-- Overall quality of customer service received from City employee 71.6%36.3%39.4% •Parks & Recreation • Landscape Staffing and Park Maintenance (12.5 vacancy redirects) •Library •Books and Materials - $350,000 •Improve digital access for Virginia Beach residents through non-resident charge •Human Services •Benefits Program Assistants (2 FTEs) •Family Support Specialist (1 FTE) 14 Development Services & Code Enforcement Resident Satisfaction Results Virginia Beach Atlantic Region National Average Overall quality of new development in Virginia Beach 30%-- Variety of housing options in the City 32%-- Overall Appearance of Virginia Beach 79.8%63.9%54.7% Enforcement of junk and debris cleanup on private property 36.2%45.1%52.5% Enforcing exterior maintenance of commercial/business property 42.8%48.9%46.3% Enforcing mowing & cutting of weeds on private property 44.7%44.3%46.1% •Planning •Zoning Ordinance Update ($1.75 million) •Housing and Neighborhood Preservation •Code Enforcement - Technology Pilot •Federal Revenue realignment - Code Enforcement returned to General Fund creating capacity for additional housing restoration grants. 15 Other Areas of Community Support 16 •Regional Grants •FY 2025-26 Reconciliation Direction •Community Organization Grant Committee recommendation forthcoming •FY 2026-27 Proposed Budget holds funding in a set aside reserve pending further City Council discussion and direction •Beach Events •Holiday Lights •Additional festivals programmed Citywide Funding Requests •Listed in Operating Budget document in the “Requested But Not Funded” Section •Current Services and New Services •Across all funds total unmet funding requests by departments of $22,178,739 million and 123.84 FTEs 17 FY 2026-27 to FY 2031-32 City Manager’s Proposed Capital Improvement Program 18 Programmed CIP $5.3 billion total, including appropriations to date 19 Buildings & Assets 10%Coastal Projects 3% Economic and Tourism Development 6% Information Technology 4% Parks and Recreation 6% Roadways 18% Water & Sewer Utility 12% Stormwater & Flood Protection 23% Schools 18% FY 2026-27 through FY 2031-32 CIP Summary •Year-1 CIP Appropriations: $409.8 million •Projects •10 New •5 newly reflected as fully funded •For the first time in 3 years, no new projects delayed/deferred •Projects that were fully funded in FY 2025-26 remained funded •Revenue •$35.8 million in additional State/Federal revenue secured •$156 million in charter bond capacity preserved for future utilization 20 CIP Highlights – Parks & Recreation Resident Satisfaction Results Virginia Beach Atlantic Region National Average Availability of trails and pathways 73%-- Overall quality of Parks & Recreation programs and facilities 88.1%48.9%49.2% Physical conditions of City parks, trails, and outdoor facilities 87%-- •Modernization Plan •Fee increase from $120 to $125 •Great Neck Recreation Center construction funding in FY 2027-28 •Design of Princess Anne and Bayside Recreation Centers •Lynnhaven Restroom: $250,000 •FY 2026 Reconciliation 21 CIP Highlights – Economic Development Resident Satisfaction Results Virginia Beach Atlantic Region National Average Use of Economic Development incentives to support economic opportunities for residents 34%-- Familiarity with City’s plans for development & growth 34%-- •Resort Parking: $25 million •The Dome Maintenance: $3 million (reflected in Buildings & Assets) •Pembroke Square Public Parking: $5.5 million (supported by SSD) •Atlantic Avenue Street Improvements: Revised project down $7 million •Town Center Garage Maintenance: $7.3 million (supported by TIF) 22 CIP Highlights – Roadways Resident Satisfaction Results Virginia Beach Atlantic Region National Average Overall conditions of major City streets 54.4%56.6%50.1% Ability to predict travel time to places in Virginia Beach 59%-- •Maintains previously fully funded projects •Cleveland Street Phase IV: $2 million •General Booth Boulevard / Oceana Boulevard Intersection: $1.2 million •Providence Road: $787,405 •Fully Funds •Lookout Road Sidewalk: $622,153 (speed enforcement) •Woodstock Road Sidewalk: $2.7 million (speed enforcement) •Holland Road Phase I: $11.9 million •Independence/Edwin Drive: 8.7 million •Leverages State/Federal Revenue 23 CIP Highlights – Building Infrastructure 24 •Courthouse Investments: $20.2 million (year one) •Aquarium Modernization: $3 million (year one) capped pending future City Council decision and direction •Library Maintenance: $3.6 million (year one) •Human Services Maintenance: $4.1 million (year one) •Municipal Campus: $5 million (each year) •Princess Anne High School: $330.4 million total by year six Citywide CIP Funding Requests •Listed in CIP document in the “Requested But Not Funded” Section •Existing Projects and Additional Funding for projects: •Across all sections total unmet funding requests of $547.6 million for 47 projects •Does not include balance to complete on all existing projects for Flood Protection Program and Schools 25 Budget Sustainability 26 •Limited expansion of services resulting in net new on-going cost •Strategic utilization of one-time funding •Fund Balance for one-time cost •Interest income for one-time cost •Tax Relief Credit •Sustainable reduction not impacting current service attributable to VRS and higher revenue growth •Management of Attrition savings •$10 million to balance budget •Flexibility for departments to deliver services •Utilization in Year-2 of the CIP General Fund Attrition/Vacancy Savings 27 FY 2024-25 Budget Actuals Difference Salary and Benefits 531,146,086 508,786,469 22,359,617 Contracted Manpower 12,337,582 15,334,836 (2,997,254) Overtime 22,918,129 27,319,193 (4,401,064) Net Vacancy Savings $14,961,299 FY 2026-27 Revenues 28 Reducing General Tax Support General Fund department specific local revenue increases $6.2 million reducing local tax supported need. Some notable: •Aquarium – Revenue increases (PISC) •Planning Department –Revenue increases (PISC) •City Treasurer –Revenue increases (PISC) •Human Services –Revenue increases (PISC) •Police –Revenue increases (PISC) •CVB –Revenue increases (PISC) •Parks & Recreation –Increased fees and vacancy redirections (PISC) •Public Works –VDOT support and vacancy redirections Notable departments with reduced expenditures: •Cultural Affairs – MOCA Utilities •Economic Development –Expenditure Reductions (PISC) •ECCS –Seven Vacant Positions reduced 29 FY 2026-27 Revenue Highlights 30 Program User Fee Adjustments Current Proposed Parks & Recreation Fees (various)Varied Varied Library Print Fee Varied (ex. $0.50 per page)Eliminated with maximum number of print Library Non-resident Digital Access -$10 - $35 Aquarium - motorized wheelchair rental -$30 - $40 Waste Management Can Replacement $75 $100 Waste Management Yard Debris Trailer $40 per day $75 weekend $50 per day $150 weekend Water & Sewer Year-4 of 5 Varied Varied Tax Burden and Measures Resident Satisfaction Results Virginia Beach Atlantic Region National Average Overall value that you receive for your City tax dollars and fees 47.9%31.1%32.9% 31 Tax or Fee FY 2025-26 FY 2026-27 Change Real Estate Tax $3,543 $3,721 $178 Personal Property Tax $441 $402 ($39) Utility Tax $108 $108 $0 Telecomm Tax $92 $92 $0 Restaurant Meals Tax $502 $502 $0 Admissions Tax $180 $180 $0 Vehicle License $60 $60 $0 Stormwater Utility Fee $212 $212 $0 Waste Management Fee $367 $367 $0 Water & Sewer Fee $772 $791 $19 Total $6,277 $6,435 $158 Local Comparison of Tax Rates Tax/Fee Virginia Beach Chesapeake Norfolk Portsmouth Suffolk Hampton Newport News Real Estate $0.97 $1.01 $1.25 $1.30 $1.07 $1.16 $1.18 Personal Property (Vehicles & Business)$4.00 $4.08 $4.33 $5.00 $4.25 $4.50 $4.50 Personal Property (Machinery & Tools)-$0.64 $1.70 $1.50 $0.63 $1.23 $1.25 Personal Property (Boats)-$0.09 -$0.50 $1.50 -$1.00 Automobile License Registration $30.00 $26.00 $31.00 $32.00 $26.00 $35.00 $26.00 Cigarette (per pack)$0.75 $0.65 $0.95 $0.95 $0.75 $0.85 $0.85 Solid Waste Fee (per month) $30.55 -$33.41 $29.16 $30.00 $38.05 $25.30 Meals 6.0%6.0%6.5%7.5%6.5%7.5%7.5% Admissions 10.0%10.0%10.0%10.0%10.0%10.0%10.0% Hotel 8.0%8.0%8.0%8.0%8.0%8.0%8.0% Hotel Flat Tax $2.00 $1.00 $3.00 $3.00 $1.00 $2.00 $1.00 32 Annual Tax Relief Programs Real Estate •Disabled Veterans and Surviving Spouses Tax Relief •Elderly and Disabled Tax Relief •Tax Relief for Surviving Spouses Personal Property •10% Local Tax Relief Credit Personal Vehicle •Business 2-year exemption •Elderly and Disabled •Volunteer Rescue •Veteran Tax relief Business Professional Occupational License (BPOL) •2-year tax exemption for new businesses Local Vehicle Registration •Military Local •Volunteer Local Vehicle 33 History of RE Tax Relief Impact on General Fund 34 Fiscal Year Total Parks & Rec ARP Outdoor Initiative Flood Protection STW Operations Major Projects General Fund Change 2020-21 101.75 3.48 0.90 0.47 - 2.50 -94.40 - 2021-22 99.00 3.48 0.90 0.47 - 2.50 -91.65 (2.75) 2022-23 99.00 3.48 0.90 0.47 4.10 2.50 -87.55 (4.10) 2023-24 99.00 3.48 0.90 0.47 4.10 2.50 -87.55 - 2024-25 97.00 3.48 0.90 0.47 4.10 2.50 -85.55 (2.00) 2025-26 97.00 3.48 0.60 0.47 4.10 2.50 0.30 85.55 - Grand Total (4.75)- - - 4.10 - -(8.85)(8.85) Retreat Direction to Continue Capacity Discussion Open Space •Purpose – preservation of land that has been identified as a candidate for future recreational amenities •Obligations –debt service ends FY 2027-28, program staff 6.08 FTEs •Dedication –0.17% of restaurant meals tax equal $3.25 million •Fund Balance –$12.5 million (excluding CIP funds available) Agriculture Reserve Program •Purpose – promote and encourage the preservation of farmland •Obligations –interest payments through FY 2049-50, Stormwater Transfer $990,000 until FY 2044-45, program staff 1.6 FTEs •Dedication –0.6¢ of the real estate tax equal $5.1 million •Fund Balance –$26.6 million 35 Budget Process Policy Discussions and Guidance •Regional Grants •FY 2025-26 Reconciliation Direction for COG review •Recommendations forthcoming from committee •City Council allocation direction needed •School Revenue Sharing Formula •Health Insurance Parity Proposed Language •Extending through June 30, 2028 •Arts and Culture Dedication •20% of Amusement Tax •Unallocated Reserve = $425,427 36 Retreat Guidance on Budget Presentations •Written executive summaries in lieu of PowerPoints •More City Council discussion at workshops •Each workshop to be “themed” to the greatest possible extent •Week 1: Public Safety, Regional Grants •Week 2: Compensation and Benefits, Housing, Human Services, Schools •Week 3: Infrastructure, Revenue Sharing Formula •Week 4: Economic Development CIP, CVB, Parks & Recreation, Cultural Affairs • Staff will be present to answer questions 37 Budget Adoption Timeline Date Item April 7 Council Workshop April 14 Council Workshop April 15 Public Hearing at Virginia Beach Convention Center April 21 Council Workshop Public Hearing in Council Chambers April 28 Council Workshop May 5 Reconciliation Workshop May 12 City Council Votes on Budget 38 Questions & Discussion 39